I get this question a lot: how much should it cost to process a gift? It’s a valid question most easily handled with: “It depends.” Well, I’m tired of that answer so I’ve devised a calculation. My math is not as important as your organization’s math, but we should all be more focused on how to deliver more resources to forward our missions (i.e., streamline costs and/or increase revenues).

What are the costs of processing a gift or pledge? The components vary, by gift type, organization type, and others. The main cost is staff time, but we should also include a portion of the database costs, any services or service fees, and the materials/resources involved.

With costs estimated, how do these costs accumulate? Gift processing has four stages–intake, batching, entry, and finalization–so I’ve explored each to give a sense of costs per stage:

Intake: how the gift comes in affects costs.

Batching: the type of gift and associated information should be factored in.

Entry: some gifts take a lot longer to enter than others.

Finalization: receipts, thank yous, and reconciliation all take time and money.

Of course, every organization will differ in the actual calculation. That’s part of what makes this such a hard number to determine. Have a look at this infographic that calculates the cost to process each gift:

Your team's numbers will differ, but these components add up

The bottom line is that all gifts cost time, energy, and resources to process. Is your cost $6.50 per gift? Is it much more? Less? If your team is too efficient, you may be missing stewardship or quality control opportunities. Below some level, a gift costs an organization money. That number is probably closer to $20 for some gifts (tributes) than anyone would like to admit, especially if your team processes thousands of $20 gifts. The nature of philanthropy makes it nearly impossible (and certainly un-palatable) to reject small gifts, but messaging around the impact of giving could switch from the overly naive “every dollar counts” notion to something more sophisticated. So, be sure your efforts are pointing donors in the right direction.

Don’t take my word for it. Do the math. Then, with your organization’s answer(s), try to shape donor behaviors through smarter direct response strategies supported by streamlining your operations so that you deliver as much money as possible to support your mission.

An uproar about data modeling was in full swing the last few days. The NYT reported that Target uses data to, well, target customers. It got one wrong (spilling the beans about a daughter’s pregnancy to her father!) by getting it right (quickly gathering, analyzing and distributing marketing based on data points that knew more about the daughter than the dad). The data screening and data modeling trends have long taken hold in our industry. Now we are starting to see even more potentially questionable applications of data taken from the corporate world, raising some base questions: What about privacy? What about effectiveness? What about competitive advantage? What about creeping people out?

This raises the question: how far can and should data analysis go in fundraising? As a card-carrying member of APRA, I value research, analytics and prospect management. Data are the fuel for fundraising. As a father, or as a recipient of seemingly countless fundraising calls from poorly trained solicitors via robo-dialing, or as a donor, I wonder everyday where fundraisers should draw the line.

This topic–what data is “available” and how can/should we use it to raise money–is increasingly salient because data points are increasingly available. How should you sort through the details? Here is my three-point quick assessment approach:

My starting point is typically not just can you raise money with a data-driven tactic but will the tactic build relationships?

In the long run, gimmicks and disingenuous strategies deliver fewer results than donor-centric and mission-critical approaches. Which is it?

But, it may not be long before unheard of tactics become commonplace approaches. Do benefits outweigh risks?

So, the short answer to this profound question is that focusing on relationships first should provide the answerfor your organization’s approach to what data and when. I’m planning a more thorough look at the topic later this year (HIPAA, FERPA, national do not call lists, consumer data applications, and more). In the meantime, I welcome your cases, conundrums, and ideas.